Price comparison websites give quick results, but did you know that they tend to exclude whole sections of the professional indemnity insurance market? A business broker offers a PI policy checklist to help you in your search
Most people buy insurance believing, or at least hoping, they won’t ever need to use it. But professional indemnity (PI) claims are one of the most common for insurers. Insurance broker Policy Bee said PI claims made up over a quarter of all claims it handled in 2020.
PI is a staple of business insurance and protects freelancers and businesses against claims their work wasn’t up to scratch. PI claims are also the costliest. Last year, PolicyBee’s largest PI claim was settled at £465,000. And that excludes legal fees.
The potentially huge sums involved in PI claims would cause serious concern for most business owners, making it crucial they have a policy with the capacity to cover the whole cost or cover what their business sector actually needs.
Business owners should be cautious when using price comparison websites to research and purchase professional indemnity (PI) insurance, said Policy Bee, as the cover provided could be inadequate for their needs.
Lisa Carr, customer care team leader at PolicyBee, said: “Professional indemnity insurance is essential for every type of business. The danger of buying a policy on price alone is that it may not include all the cover you need, because not all professional indemnity policies are created equal.”
Carr said that claims can be quite complex, often involving investigators, loss adjusters and solicitors arguing the case and a court deciding how much compensation the insurer should pay.
“For this reason, claims can take months to resolve,” she said.
Checklist of things to look out for when buying a PI policy:
- Does the policy offer retroactive cover, to deal with claims concerning work done in the past, maybe months or years ago?
- Are there any ‘hidden costs’ in the form of admin fees that aren’t stated upfront?
- Is the level of cover offered enough to cope with potentially the biggest and most complicated claim you could face? Is there a big excess to pay?
- Do you need cover for unique risks associated with your particular business activities?
- Do you belong to a profession that demands a specific policy wording or a minimum level of cover?
- Are the policy’s geographic and jurisdictional limits wide enough to cover where you do business, and who you do it with?
- Have you read carefully and understood the limits and exclusions of the policy?
Source: Policy Bee